The “Reasonable Consumer’s” View of Green Labels—Lessons From Two Greenwashing Cases

By: Neal Marder and Christian E. Dodd

Posted: March 2, 2012, from the March 2012 issue of GCI Magazine.

Select symbols and wording that reflect the product itself and its own green features, and avoid those that could be associated with an independent organization if the product has not in fact been endorsed or recognized by that organization or group.

A symbol should not suggest or imply that the product has been ranked by a rating system unless an independent, third-party organization has rated the product.

Companies that market their products as green should familiarize themselves with and adhere to the FTC Green Guides, as they are often resorted to as guidance to what types of environmental claims are potentially misleading.

In recent years, many companies have attempted to capitalize on consumers’ heightened and growing concern about environmental issues by touting the green aspects and features of their products or services. This has led to consumer class action lawsuits premised on claims of greenwashing, the practice of making false or unverifiable claims that a product or service is environmentally friendly. Two recent decisions illustrate how the use of certain words or symbols on product packaging can impact whether such a class action lawsuit will survive. These decisions provide guidance to companies that make claims that their products or services are environmentally friendly. The following cases were brought to court and litigated in California.

Illustrative Cases

In Koh v. SC Johnson & Son, Inc., 2010 U.S. Dist. Lexis 654 (N.D. Cal. Jan. 6, 2010), the plaintiff alleged SC Johnson prominently placed a “seal of approval” label on the front of its Windex products, suggesting that products bearing this label were environmentally sound. The label had a green background and read “Greenlist Ingredients” under a drawing of two leaves and a stem. The reverse side of the label, which can be read through the back of the clear Windex packaging, read “Greenlist is a rating system that promotes the use of environmentally responsible products. For additional information, visit www.scjohnson.com[.]”

The plaintiff alleged that these representations conveyed that the product had received the seal of approval of a nonprofit environmental group or other neutral third party, and further alleged that he would not have purchased Greenlist-labeled Windex at its premium price had he known the Greenlist label was actually created by SC Johnson and not a third party, and that Windex was not environmentally friendly.

The class action lawsuit against SC Johnson, alleging, among others, violation of California’s Unfair Competition Law (UCL), False Advertising Law (FAL) and Consumer Legal Remedies Act (CLRA). SC Johnson moved to dismiss the plaintiff’s claims, but the United States District Court for the Northern District of California denied the motion. The Court found the plaintiff’s allegation that “he did not receive the benefit of the bargain in that Windex cost more than similar products without misleading labeling” satisfied the pleading requirements of the UCL and FAL. The Court further concluded that a reasonable consumer could have found the Greenlist label to be misleading.